Hertz Decides to Shift Gears Away from EVs
In a notable pivot within the auto rental market, Hertz Global Holdings has decided to part ways with a significant portion of its electric vehicle (EV) fleet, opting to sell about 20,000 cars.
The decision, linked to spiraling expenses arising from damages and collisions, sees a renewed focus on gas-powered models, contrasting sharply with previous electrification efforts.
Market Response: A Downturn in Premarket Activity
This strategic about-face has not fared well with investors. Hertz's stock, incorporating EVs from high-profile producers such as Tesla and Polestar, saw a staggering drop - up to 9% - in premarket trading.
Behind the Wheel: The Costs of Collisions and Damage
As the driving force behind Hertz's EV downsizing, the heightened insurance, collision and damage costs have steered the conversation towards overall EV maintenance economics.
The company’s commentary outlines the core rationale behind their shrinking electric fleet, contributing to an industry-wide debate on EV viability in rental operations.
Accounting for Depreciation: A Financial Hit
Hertz has braced itself for an increase in depreciation expenses - forecasting a $245 million hit stemming from the projected EV fleet sales in the concluding quarter of 2023.
A Strategic U-Turn from Ambitious EV Plans
Flashback to April 2022 when Hertz made an announcement to purchase a whopping 65,000 EVs from Polestar across five years painted a bright future for the EV market.
This ambitious purchase agreement followed the substantial Tesla order that capped off 2021.
Rolling Off the Lot: Hertz's EVs in the Used Car Market
But has Hertz been brought back to reality?
With over 700 EV listings, Hertz's used car platform is now a hotbed for potential EV owners, offering a variety that ranges from BMW i3 and Chevrolet Bolt to a fleet of Tesla favorites, including the Model 3 and Model Y SUVs.